Capturing NAFTA’s Impact with Applied General Equilibrium Models

Abstract

In this chapter, we discuss the work of four of the applied general equilibrium (AGE) modeling teams most prominent in discussions of the North American Free Trade Agreement (NAFTA). All of these teams’ approaches are good examples of AGE models (see Chapters 3–6): Brown, Deardorff, and Stern model NAFTA’s impact on all three na- tional economies; Cox focuses on Canada; Sobarzo focuses on Mexico; and Markusen, Rutherford, and Hunter analyze NAFTA’s impact on a single industry—the automobile industry—which accounts for a major portion of trade in North America.